QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-14905

BERKSHIRE HATHAWAY INC.

(Exact name of registrant as specified in its charter)

Delaware

47-0813844

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification Number)

3555 Farnam Street, Omaha, Nebraska 68131

(Address of principal executive office)

(Zip Code)

(402) 346-1400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

Average shares outstanding include average Class A common shares and average Class B common shares determined on an equivalent Class A common stock basis. Net earnings per common share attributable to Berkshire Hathaway shown above represents net earnings per equivalent Class A common share. Net earnings per Class B common share is equal to one-fifteen-hundredth (1/1,500) of such amount.

The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc. (“Berkshire” or “Company”) consolidated with the accounts of all its subsidiaries and affiliates in which Berkshire holds controlling financial interests as of the financial statement date. In these notes the terms “us,” “we,” or “our” refer to Berkshire and its consolidated subsidiaries. Reference is made to Berkshire’s most recently issued Annual Report on Form 10-K (“Annual Report”) that included information necessary or useful to understanding Berkshire’s businesses and financial statement presentations. Our significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in the Annual Report. Certain immaterial amounts in 2010 have been reclassified to conform with the current year presentation. Financial information in this Report reflects any adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with accounting principles generally accepted in the United States (“GAAP”).

For a number of reasons, our results for interim periods are not normally indicative of results to be expected for the year. The timing and magnitude of catastrophe losses incurred by insurance subsidiaries and the estimation error inherent to the process of determining liabilities for unpaid losses of insurance subsidiaries can be relatively more significant to results of interim periods than to results for a full year. Variations in the amount and timing of investment gains/losses can cause significant variations in periodic net earnings. Investment gains/losses are recorded when investments are disposed or are other-than-temporarily impaired. In addition, changes in the fair value of derivative assets/liabilities associated with derivative contracts that are not accounted for as hedging instruments can cause significant variations in periodic net earnings.

Note 2. New accounting pronouncements

In October 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-26, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts.” ASU 2010-26 modifies the types of costs incurred by insurance entities that may be deferred in the acquiring or renewing of insurance contracts. ASU 2010-26 requires that only direct incremental costs related to successful efforts are capitalized. Capitalized costs may include certain advertising costs which are allowed to be capitalized if the primary purpose of the advertising is to elicit sales to customers proven to have responded directly to the advertising and the probable future revenues generated from the advertising are proven to be in excess of expected future costs to be incurred in realizing those revenues. ASU 2010-26 is effective for Berkshire beginning January 1, 2012 and may be applied on a prospective or retrospective basis. We do not believe that the adoption of ASU 2010-26 will have a material effect on our Consolidated Financial Statements.

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU 2011-04 attempts to improve the comparability of fair value measurements disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. Amendments in ASU 2011-04 clarify the intent of the application of existing fair value measurement and disclosure requirements, as well as change certain measurement requirements and disclosures. ASU 2011-04 is effective for Berkshire beginning January 1, 2012 and will be applied on a prospective basis. We do not believe that the adoption of ASU 2011-04 will have a material effect on our Consolidated Financial Statements.

In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income.” ASU 2011-05 changes the way other comprehensive income (“OCI”) appears within the financial statements. Companies will be required to show net income, OCI and total comprehensive income in one continuous statement or in two separate but consecutive statements. Components of OCI may no longer be presented solely in the statement of changes in shareholders’ equity. Any reclassification between OCI and net income will be presented on the face of the financial statements. ASU 2011-05 is effective for Berkshire beginning January 1, 2012. The adoption of ASU 2011-05 will not impact the measurement of net earnings or other comprehensive income.

6

Notes To Consolidated Financial Statements (Continued)

Note 3. Significant business acquisitions

Our long-held acquisition strategy is to purchase businesses with consistent earning power, good returns on equity and able and honest management at sensible prices.

On February 12, 2010, we acquired all of the outstanding common stock of the Burlington Northern Santa Fe Corporation that we did not already own (about 264.5 million shares or 77.5% of the outstanding shares) for aggregate consideration of $26.5 billion that consisted of cash of approximately $15.9 billion with the remainder in Berkshire common stock (80,931 Class A shares and 20,976,621 Class B shares). Approximately 50% of the cash component was funded with existing cash balances with the remainder funded by proceeds from debt issued by Berkshire. The acquisition was completed through the merger of a wholly-owned merger subsidiary (a Delaware limited liability company) and Burlington Northern Santa Fe Corporation. The merger subsidiary was the surviving entity and was renamed Burlington Northern Santa Fe, LLC (“BNSF”). BNSF is based in Fort Worth, Texas, and through BNSF Railway Company operates one of the largest railroad systems in North America with approximately 32,000 route miles (including 23,000 route miles of track owned by BNSF) of track in 28 states and two Canadian provinces.

Prior to February 12, 2010, we owned 76.8 million shares of BNSF (22.5% of the outstanding shares), which were acquired between August 2006 and January 2009. We accounted for those shares pursuant to the equity method and as of February 12, 2010, our investment had a carrying value of approximately $6.6 billion. Upon completion of the acquisition of the remaining BNSF shares, we re-measured our previously owned investment in BNSF at fair value as of the acquisition date. In the first quarter of 2010, we recognized a one-time holding gain of approximately $1 billion representing the difference between the fair value of the BNSF shares that we acquired prior to February 12, 2010 and our carrying value under the equity method. BNSF’s financial statements are included in our Consolidated Financial Statements beginning as of February 13, 2010.

In the first quarter of 2011, we acquired 16.5% of the outstanding common stock of Marmon Holdings, Inc. (“Marmon”) for approximately $1.5 billion in cash, thus increasing our ownership to 80.2%. We have owned a controlling interest in Marmon since 2008. We increased our interests in the underlying assets and liabilities of Marmon; however, under current GAAP, the excess of the purchase price over the carrying value of the noncontrolling interests acquired is not allocable to assets or liabilities. Accordingly, we recorded a charge of approximately $600 million to capital in excess of par value in our consolidated shareholders’ equity as of December 31, 2010.

On March 13, 2011, Berkshire and The Lubrizol Corporation (“Lubrizol”) entered into a merger agreement, whereby Berkshire will acquire all of the outstanding shares of Lubrizol common stock for cash of $135 per share. The aggregate merger consideration is expected to be approximately $9 billion. The acquisition was approved at a special meeting of Lubrizol shareholders on June 9, 2011. In addition to approval by Lubrizol’s shareholders, the completion of the acquisition is subject to customary closing conditions, including the expiration of waiting periods and the receipt of approvals under U.S. and applicable non-U.S. merger control regulations. We expect all such approvals to be obtained within the next one to three months.

Lubrizol is an innovative specialty chemical company that produces and supplies technologies to customers in the global transportation, industrial and consumer markets. These technologies include lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as fuel additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and pharmaceuticals; specialty materials, including plastics technology; and performance coatings in the form of specialty resins and additives. Lubrizol’s industry-leading technologies in additives, ingredients and compounds enhance the quality, performance and value of customers’ products, while reducing their environmental impact. For the year ended December 31, 2010, Lubrizol reported consolidated revenues of $5.4 billion and net earnings of $732 million.

In June 2011, we acquired the noncontrolling interests in Wesco Financial Corporation (“Wesco”) for aggregate consideration of $543 million consisting of cash of approximately $298 million and 3.25 million shares of Berkshire Class B common stock. Wesco is now an indirect wholly owned subsidiary of Berkshire.

7

Notes To Consolidated Financial Statements (Continued)

Note 4. Investments in fixed maturity securities

Investments in securities with fixed maturities as of June 30, 2011 and December 31, 2010 are summarized below (in millions).

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Fair

Value

June 30, 2011

U.S. Treasury, U.S. government corporations and agencies

$

2,225

$

43

$

—

$

2,268

States, municipalities and political subdivisions

3,083

219

—

3,302

Foreign governments

13,264

206

(46

)

13,424

Corporate bonds

11,468

2,537

(23

)

13,982

Mortgage-backed securities

2,573

317

(12

)

2,878

$

32,613

$

3,322

$

(81

)

$

35,854

December 31, 2010

U.S. Treasury, U.S. government corporations and agencies

$

2,151

$

48

$

(2

)

$

2,197

States, municipalities and political subdivisions

3,356

225

—

3,581

Foreign governments

11,721

242

(51

)

11,912

Corporate bonds

11,773

2,304

(23

)

14,054

Mortgage-backed securities

2,838

312

(11

)

3,139

$

31,839

$

3,131

$

(87

)

$

34,883

Investments in fixed maturity securities are reflected in the Consolidated Balance Sheets as follows (in millions).

June 30,

December 31,

2011

2010

Insurance and other

$

34,813

$

33,803

Finance and financial products

1,041

1,080

$

35,854

$

34,883

As of June 30, 2011, fixed maturity investments that were in a continuous unrealized loss position for more than 12 months had unrealized losses of $21 million. As of December 31, 2010, fixed maturity investments that were in a continuous unrealized loss position for more than 12 months had unrealized losses of $24 million.

The amortized cost and estimated fair value of securities with fixed maturities at June 30, 2011 are summarized below by contractual maturity dates. Actual maturities will differ from contractual maturities because issuers of certain of the securities retain early call or prepayment rights. Amounts are in millions.

Due in one

year or less

Due after one

year through

five years

Due after five

years through

ten years

Due after

ten years

Mortgage-backed

securities

Total

Amortized cost

$

8,314

$

14,485

$

4,578

$

2,663

$

2,573

$

32,613

Fair value

8,515

15,801

5,428

3,232

2,878

35,854

Note 5. Investments in equity securities

Investments in equity securities as of June 30, 2011 and December 31, 2010 are summarized based on the primary industry of the investee in the table below (in millions).

Cost Basis

Unrealized

Gains

Unrealized

Losses

Fair

Value

June 30, 2011

Banks, insurance and finance

$

15,562

$

10,334

$

(688

)

$

25,208

Consumer products

13,227

13,607

—

26,834

Commercial, industrial and other

10,716

4,830

(3

)

15,543

$

39,505

$

28,771

$

(691

)

$

67,585

December 31, 2010

Banks, insurance and finance

$

15,519

$

9,549

$

(454

)

$

24,614

Consumer products

13,551

12,410

(212

)

25,749

Commercial, industrial and other

6,474

4,682

(6

)

11,150

$

35,544

$

26,641

$

(672

)

$

61,513

8

Notes To Consolidated Financial Statements (Continued)

Note 5. Investments in equity securities (Continued)

Investments in equity securities are reflected in the Consolidated Balance Sheets as follows (in millions).

June 30,

December 31,

2011

2010

Insurance and other

$

66,364

$

59,819

Railroad, utilities and energy *

727

1,182

Finance and financial products *

494

512

$

67,585

$

61,513

*

Included in Other assets.

As of June 30, 2011, there were no equity security investments that were in a continuous unrealized loss position for more than twelve months where other-than-temporary impairment (“OTTI”) losses were not recorded. As of December 31, 2010 such unrealized losses were $531 million.

In the first quarter of 2011, we recorded OTTI losses of $506 million related to certain of our investments in equity securities. The OTTI losses recorded in earnings were offset by a reduction in unrealized losses recorded in other comprehensive income resulting in no impact on our consolidated shareholders’ equity. Included in the OTTI losses was $337 million related to 103.6 million shares of our investment in Wells Fargo & Company common stock. These shares had an aggregate original cost of $3,621 million. We also held an additional 255.4 million shares of Wells Fargo which were acquired at an aggregate cost of $4,394 million. These shares had an unrealized gain of $3,704 million as of March 31, 2011. Due to the length of time that certain of our Wells Fargo shares were in a continuous unrealized loss position and because we account for gains and losses on a specific identification basis, accounting regulations required us to record the unrealized losses in earnings. However, the unrealized gains are not reflected in earnings but are instead recorded directly in shareholders’ equity as a component of accumulated other comprehensive income.

Note 6. Other investments

Other investments include fixed maturity and equity securities of The Goldman Sachs Group, Inc. (“GS”), General Electric Company (“GE”), Wm. Wrigley Jr. Company (“Wrigley”) and The Dow Chemical Company (“Dow”). A summary of other investments follows (in millions).

Cost

Unrealized

Gains

Fair

Value

Carrying

Value

June 30, 2011

Other fixed maturity and equity securities:

Insurance and other

$

11,809

$

2,396

$

14,205

$

13,121

Finance and financial products

2,198

631

2,829

2,817

$

14,007

$

3,027

$

17,034

$

15,938

December 31, 2010

Other fixed maturity and equity securities:

Insurance and other

$

15,700

$

4,758

$

20,458

$

19,333

Finance and financial products

2,742

947

3,689

3,676

$

18,442

$

5,705

$

24,147

$

23,009

In 2008, we acquired 50,000 shares of 10% Cumulative Perpetual Preferred Stock of GS (“GS Preferred”) and warrants to purchase 43,478,260 shares of common stock of GS (“GS Warrants”) for a combined cost of $5 billion. Under its terms, the GS Preferred was redeemable at any time by GS at a price of $110,000 per share ($5.5 billion in aggregate). In March 2011, GS notified us that it would fully redeem our GS Preferred investment and on April 18, 2011, we received the redemption proceeds of $5.5 billion. The GS Warrants remain outstanding and expire in 2013 and can be exercised for an aggregate cost of $5 billion ($115/share). In 2008, we also acquired 30,000 shares of 10% Cumulative Perpetual Preferred Stock of GE (“GE Preferred”) and warrants to purchase 134,831,460 shares of common stock of GE (“GE Warrants”) for a combined cost of $3 billion. The GE Preferred may be redeemed by GE beginning in October 2011 at a price of $110,000 per share ($3.3 billion in aggregate). The GE Warrants expire in 2013 and can be exercised for an additional aggregate cost of $3 billion ($22.25/share).

9

Notes To Consolidated Financial Statements (Continued)

Note 6. Other investments (Continued)

In 2008, we acquired $4.4 billion par amount of 11.45% Wrigley subordinated notes due in 2018 and $2.1 billion of 5% Wrigley preferred stock. In 2009, we also acquired $1.0 billion par amount of Wrigley senior notes due in 2013 and 2014. We currently own $800 million of the Wrigley senior notes and a joint venture in which we have a 50% economic interest owns $200 million of the Wrigley senior notes. The Wrigley subordinated and senior notes are classified as held-to-maturity and we carry these investments at cost, adjusted for foreign currency exchange rate changes that apply to certain of the senior notes. We carry the Wrigley preferred stock at fair value classified as available-for-sale.

In 2009, we acquired 3,000,000 shares of Series A Cumulative Convertible Perpetual Preferred Stock of Dow (“Dow Preferred”) for a cost of $3 billion. Under certain conditions, we can convert each share of the Dow Preferred into 24.201 shares (equivalent to a conversion price of $41.32 per share) of Dow common stock. Beginning in April 2014, if Dow’s common stock price exceeds $53.72 per share for any 20 trading days in a consecutive 30-day window, Dow, at its option, at any time, in whole or in part, may convert the Dow Preferred into Dow common stock at the then applicable conversion rate. The Dow Preferred is entitled to dividends at a rate of 8.5% per annum.

Note 7. Investment gains/losses

Investment gains/losses are summarized below (in millions).

Second Quarter

First Six Months

2011

2010

2011

2010

Fixed maturity securities —

Gross gains from sales and other disposals

$

94

$

270

$

176

$

568

Gross losses from sales and other disposals

(4

)

—

(4

)

(3

)

Equity and other securities —

Gross gains from sales and other disposals

1,267

123

1,268

335

Gross losses from sales and other disposals

(4

)

(17

)

(14

)

(189

)

Other

(64

)

7

(38

)

990

$

1,289

$

383

$

1,388

$

1,701

Net investment gains/losses are reflected in the Consolidated Statements of Earnings as follows.

Insurance and other

$

1,128

$

381

$

1,214

$

1,696

Finance and financial products

161

2

174

5

$

1,289

$

383

$

1,388

$

1,701

Equity and other securities investment gains in the second quarter and first six months of 2011 included $1.25 billion with respect to the redemption of our GS Preferred investment. In 2010, other investment gains included a one-time holding gain of $979 million related to our BNSF acquisition in February.

Note 8. Receivables

Receivables of insurance and other businesses are comprised of the following (in millions).

June 30,

December 31,

2011

2010

Insurance premiums receivable

$

7,336

$

6,342

Reinsurance recoverable on unpaid losses

2,961

2,735

Trade and other receivables

9,481

12,223

Allowances for uncollectible accounts

(382

)

(383

)

$

19,396

$

20,917

As of December 31, 2010, trade and other receivables included approximately CHF 3.7 billion ($3.9 billion) related to the redemption of an investment. The redemption proceeds were received on January 10, 2011.

10

Notes To Consolidated Financial Statements (Continued)

Note 8. Receivables (Continued)

Loans and finance receivables of finance and financial products businesses are comprised of the following (in millions).

June 30,

December 31,

2011

2010

Consumer installment loans and finance receivables

$

13,734

$

14,042

Commercial loans and finance receivables

839

1,557

Allowances for uncollectible loans

(374

)

(373

)

$

14,199

$

15,226

Allowances for uncollectible loans primarily relate to consumer installment loans. Provisions for consumer loan losses were $161 million in the first six months of 2011 and $178 million for the first six months of 2010. Loan charge-offs, net of recoveries, were $160 million in the first six months of 2011 and $176 million for the first six months of 2010. Consumer loan amounts are net of acquisition discounts of $550 million at June 30, 2011 and $580 million at December 31, 2010. At June 30, 2011, approximately 96% of consumer installment loan balances were evaluated collectively for impairment whereas about 84% of commercial loan balances were evaluated individually for impairment.

As a part of the evaluation process, credit quality indicators are reviewed and loans are designated as performing or non-performing. At June 30, 2011, approximately 98% of consumer installment and commercial loan balances were determined to be performing and approximately 93% of those balances were current as to payment status.

Note 9. Inventories

Inventories are comprised of the following (in millions).

June 30,

December 31,

2011

2010

Raw materials

$

1,207

$

1,066

Work in process and other

638

509

Finished manufactured goods

2,423

2,180

Goods acquired for resale

3,692

3,346

$

7,960

$

7,101

Note 10. Goodwill and other intangible assets

A reconciliation of the change in the carrying value of goodwill is as follows (in millions).

June 30,

December 31,

2011

2010

Balance at beginning of year

$

49,006

$

33,972

Acquisition of BNSF

—

14,803

Other

119

231

Balance at end of period

$

49,125

$

49,006

Intangible assets other than goodwill are included in other assets and are summarized as follows (in millions).

June 30, 2011

December 31, 2010

Gross carrying

amount

Accumulated

amortization

Gross carrying

amount

Accumulated

amortization

Insurance and other

$

7,023

$

2,033

$

6,944

$

1,816

Railroad, utilities and energy

2,087

470

2,082

306

$

9,110

$

2,503

$

9,026

$

2,122

Trademarks and trade names

$

2,033

$

192

$

2,027

$

166

Patents and technology

2,970

1,215

2,922

1,013

Customer relationships

2,682

709

2,676

612

Other

1,425

387

1,401

331

$

9,110

$

2,503

$

9,026

$

2,122

11

Notes To Consolidated Financial Statements (Continued)

Note 10. Goodwill and other intangible assets (Continued)

Amortization expense was $374 million for the first six months of 2011 and $340 million for the first six months of 2010. Intangible assets with indefinite lives as of June 30, 2011 and December 31, 2010 were $1,640 million and $1,635 million, respectively.

Note 11. Property, plant and equipment

Property, plant and equipment of our insurance and other businesses is comprised of the following (in millions).

Ranges of

estimated useful life

June 30,

2011

December 31,

2010

Land

—

$

760

$

744

Buildings and improvements

3 – 40 years

4,842

4,661

Machinery and equipment

3 – 25 years

11,707

11,573

Furniture, fixtures and other

3 – 20 years

2,061

1,932

Assets held for lease

12 –30 years

5,838

5,832

25,208

24,742

Accumulated depreciation

(9,563

)

(9,001

)

$

15,645

$

15,741

Depreciation expense of insurance and other businesses for the first six months of 2011 and 2010 was $791 million and $762 million, respectively.

Property, plant and equipment of our railroad, utilities and energy businesses is comprised of the following (in millions).

Ranges of

estimated useful life

June 30,

2011

December 31,

2010

Railroad:

Land

—

$

5,913

$

5,901

Track structure and other roadway

5 – 100 years

35,952

35,463

Locomotives, freight cars and other equipment

5 – 37 years

4,757

4,329

Construction in progress

—

747

453

Utilities and energy:

Utility generation, distribution and transmission system

5 – 85 years

38,542

37,643

Interstate pipeline assets

3 – 67 years

5,940

5,906

Independent power plants and other assets

3 – 30 years

1,100

1,097

Construction in progress

—

1,769

1,456

94,720

92,248

Accumulated depreciation

(15,413

)

(14,863

)

$

79,307

$

77,385

The utility generation, distribution and transmission system and interstate pipeline assets are the regulated assets of public utility and natural gas pipeline subsidiaries. Depreciation expense of the railroad, utilities and energy businesses for the first six months of 2011 was $1,396 million. Depreciation expense for the first six months of 2010 was $1,144 million, which includes depreciation expense of BNSF from February 13, 2010 through June 30, 2010.

12

Notes To Consolidated Financial Statements (Continued)

Note 12. Derivative contracts

Derivative contracts are used primarily by our finance and financial products businesses and our railroad, utilities and energy businesses. As of June 30, 2011 and December 31, 2010, substantially all of the derivative contracts of our finance and financial products businesses are not designated as hedges for financial reporting purposes. These contracts were initially entered into with the expectation that the premiums received would exceed the amounts ultimately paid to counterparties. Changes in the fair values of such contracts are reported in earnings as derivative gains/losses. A summary of derivative contracts of our finance and financial products businesses follows (in millions).

June 30, 2011

December 31, 2010

Assets (3)

Liabilities

Notional

Value

Assets (3)

Liabilities

Notional

Value

Equity index put options

$

—

$

6,761

$

35,089

(1)

$

—

$

6,712

$

33,891

(1)

Credit default contracts:

High yield indexes

—

110

4,841

(2)

—

159

4,893

(2)

States/municipalities

—

1,038

16,042

(2)

—

1,164

16,042

(2)

Individual corporate

88

—

3,565

(2)

84

—

3,565

(2)

Other

370

216

341

375

Counterparty netting

(81

)

(39

)

(82

)

(39

)

$

377

$

8,086

$

343

$

8,371

(1)

Represents the aggregate undiscounted amount payable at the contract expiration dates assuming that the value of each index is zero at the contract expiration date.

(2)

Represents the maximum undiscounted future value of losses payable under the contracts. The number of losses required to exhaust contract limits under substantially all of the contracts is dependent on the loss recovery rate related to the specific obligor at the time of a default.

(3)

Included in Other assets of finance and financial products businesses.

A summary of derivative gains/losses of our finance and financial products businesses included in the Consolidated Statements of Earnings are as follows (in millions).

Second Quarter

First Six Months

2011

2010

2011

2010

Equity index put options

$

(271

)

$

(1,797

)

$

(48

)

$

(1,619

)

Credit default contracts

142

(320

)

212

(112

)

Other

(55

)

(59

)

(77

)

(34

)

$

(184

)

$

(2,176

)

$

87

$

(1,765

)

The equity index put option contracts are European style options written on four major equity indexes. Future payments, if any, under these contracts will be required if the underlying index value is below the strike price at the contract expiration dates which occur between June 2018 and January 2026. We received the premiums on these contracts in full at the contract inception dates and therefore we have no counterparty credit risk. We entered into no new contracts in 2010 or 2011.

At June 30, 2011, the aggregate intrinsic value (the undiscounted liability assuming the contracts are settled on their future expiration dates based on the June 30, 2011 index values and foreign currency exchange rates) was approximately $3.9 billion. However, these contracts may not be unilaterally terminated or fully settled before the expiration dates and therefore the ultimate amount of cash basis gains or losses on these contracts may not be determined for many years. The remaining weighted average life of all contracts was approximately 9.5 years at June 30, 2011.

Our credit default contracts pertain to various indexes of non-investment grade (or “high yield”) corporate issuers, as well as investment grade state/municipal and individual corporate debt issuers. These contracts cover the loss in value of specified debt obligations of the issuers arising from default events, which are usually from their failure to make payments or bankruptcy. Loss amounts are subject to aggregate contract limits. We entered into no new contracts in 2010 or 2011.

13

Notes To Consolidated Financial Statements (Continued)

Note 12. Derivative contracts (Continued)

The high yield index contracts are comprised of specified North American corporate issuers (usually 100 in number at inception) whose obligations are rated below investment grade. High yield contracts remaining in-force at June 30, 2011 expire in 2012 and 2013. State and municipality contracts are comprised of over 500 state and municipality issuers and had a weighted average contract life at June 30, 2011 of approximately 9.7 years. Potential obligations related to approximately 50% of the notional value of the state and municipality contracts cannot be settled before the maturity dates of the underlying obligations, which range from 2019 to 2054.

Premiums on the high yield index and state/municipality contracts were received in full at the inception dates of the contracts and, as a result, we have no counterparty credit risk. Our payment obligations under certain of these contracts are on a first loss basis. Losses under other contracts are subject to aggregate deductibles that must be satisfied before we have any payment obligations.

Individual corporate credit default contracts primarily relate to issuers of investment grade obligations. In most instances, premiums are due from counterparties on a quarterly basis over the terms of the contracts. As of June 30, 2011, all of the remaining contracts in-force will expire in 2013.

With limited exceptions, our equity index put option and credit default contracts contain no collateral posting requirements with respect to changes in either the fair value or intrinsic value of the contracts and/or a downgrade of Berkshire’s credit ratings. As of June 30, 2011, our collateral posting requirement under contracts with collateral provisions was $25 million compared to $31 million at December 31, 2010. As of June 30, 2011, had Berkshire’s credit ratings (currently AA+ from Standard & Poor’s and Aa2 from Moody’s) been downgraded below either A- by Standard & Poor’s or A3 by Moody’s an additional $1.1 billion would have been required to be posted as collateral.

Our railroad and regulated utility subsidiaries are exposed to variations in the market prices in the purchases and sales of natural gas and electricity and in the purchases of fuel. Derivative instruments, including forward purchases and sales, futures, swaps and options, are used to manage these price risks. Unrealized gains and losses under the contracts of our regulated utilities that are probable of recovery through rates are recorded as a regulatory net asset or liability. Unrealized gains or losses on contracts accounted for as cash flow or fair value hedges are recorded in accumulated other comprehensive income or in net earnings, as appropriate. Derivative contract assets included in other assets of railroad, utilities and energy businesses were $142 million and $231 million as of June 30, 2011 and December 31, 2010, respectively. Derivative contract liabilities included in accounts payable, accruals and other liabilities of railroad, utilities and energy businesses were $464 million as of June 30, 2011 and $621 million as of December 31, 2010.

Note 13. Supplemental cash flow information

A summary of supplemental cash flow information for the first six months of 2011 and 2010 is presented in the following table (in millions).

First Six Months

2011

2010

Cash paid during the period for:

Income taxes

$

802

$

2,319

Interest of insurance and other businesses

115

80

Interest of railroad, utilities and energy businesses

904

790

Interest of finance and financial products businesses

340

361

Non-cash investing and financing activities:

Liabilities assumed in connection with acquisition of BNSF

—

30,968

Common stock issued in connection with acquisition of BNSF

—

10,577

Common stock issued in connection with acquisition of noncontrolling interests in Wesco Financial Corporation

245

—

14

Notes To Consolidated Financial Statements (Continued)

Note 14. Notes payable and other borrowings

Notes payable and other borrowings are summarized below (in millions). The average interest rates shown in the following tables are the weighted average interest rates on outstanding debt as of June 30, 2011. Maturity date ranges are based on borrowings as of June 30, 2011.

Average

Interest Rate

June 30,

2011

December 31, 2010

Insurance and other:

Issued by Berkshire parent company due 2012-2047

1.9

%

$

6,287

$

8,360

Short-term subsidiary borrowings

0.3

%

1,532

1,682

Other subsidiary borrowings due 2011-2036

5.3

%

2,342

2,429

$

10,161

$

12,471

In connection with the BNSF acquisition, the Berkshire parent company issued $8.0 billion aggregate par amount of senior unsecured notes, including $2.0 billion par amount of floating rate notes that matured in February 2011.

Average

Interest Rate

June 30,

2011

December 31,

2010

Railroad, utilities and energy:

Issued by MidAmerican Energy Holdings Company (“MidAmerican”) and its subsidiaries:

MidAmerican senior unsecured debt due 2012-2037

6.1

%

$

5,371

$

5,371

Subsidiary and other debt due 2011-2039

5.7

%

14,389

14,275

Issued by BNSF due 2011-2097

6.0

%

12,516

11,980

$

32,276

$

31,626

MidAmerican subsidiary debt represents amounts issued pursuant to separate financing agreements. All or substantially all of the assets of certain MidAmerican subsidiaries are or may be pledged or encumbered to support or otherwise secure the debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios. BNSF’s borrowings are primarily unsecured. As of June 30, 2011, BNSF and MidAmerican and its subsidiaries were in compliance with all applicable covenants. Berkshire does not guarantee any debt or other borrowings of BNSF, MidAmerican or their subsidiaries.

BHFC is a 100% owned finance subsidiary of Berkshire, which has fully and unconditionally guaranteed its securities. In January 2011, BHFC issued $1.5 billion par amount of notes and repaid $1.5 billion of maturing notes. The new notes are unsecured and are comprised of $750 million par amount of 4.25% senior notes due in 2021, $375 million par amount of 1.5% senior notes due in 2014 and $375 million par amount of floating rate senior notes due in 2014.

Our subsidiaries have approximately $5.9 billion of available unused lines of credit and commercial paper capacity in the aggregate at June 30, 2011, to support our short-term borrowing programs and provide additional liquidity. Generally, Berkshire’s guarantee of a subsidiary’s debt obligation is an absolute, unconditional and irrevocable guarantee for the full and prompt payment when due of all present and future payment obligations.

15

Notes To Consolidated Financial Statements (Continued)

Note 15. Fair value measurements

The estimated fair values of our financial instruments are shown in the following table (in millions). The carrying values of cash and cash equivalents, accounts receivable and accounts payable, accruals and other liabilities are deemed to be reasonable estimates of their fair values.